Open banking can streamline financial services – The Star features Myriad Connect

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2019.03.14

““East Africa now has an opportunity to build on the experience of other markets that are already embracing Open Banking, and move directly to a more effective model in the region,” according to Willie.

He notes that regulation of the environment is necessary: “If the market is left to its own devices with no regulation, the region could find itself in a position where there is a dominant player and regulators or the financial services ecosystem are, as a result, limited in how they can introduce regulation or control Open Banking initiatives in that market.

”In the European Union, on the other hand, Payment Services Directive 2 (PSD2) legislation was introduced last year to obligate banks to provide third-party Account Information Service Providers and Payment Initiation Service Providers with access to their customers’ accounts through open APIs to build financial services.

The legislation ends banks’ monopoly over financial services, bringing new competition, new urgency to innovate, and potentially – additional costs. For customers, it brings the freedom to manage their finances with the app or service provider of their choice. However, one shortcoming of PSD2 has been the lack of a clear standard for secure authentication.

“East Africa can manage its own Open Banking initiative to avoid the pitfalls already experienced in other markets. Choice and a level playing field are desirable outcomes of Open Banking, but the emergence of a monopoly, or the erosion of banks, may not be,” says Michael Muturi, Solutions Consultant, Myriad Connect.”